Note from the instructor: CMS revises its billing and payment policies to permit certain preadmission inpatient-only procedures to be bundled into the subsequent inpatient admission

Medicare Insider, March 17, 2015

This week’s note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.

In a surprising move, CMS issued Claims Processing Transmittal 3217 on Friday, March 13, changing its billing instructions to allow payment for certain preadmission inpatient only procedures bundled into a subsequent inpatient claim under the so-called three- (or one-) day window rules. This expansion of coverage applies to the following:

all preadmission inpatient-only procedures performed on the date of admission; and

all preadmission inpatient-only procedures performed during the relevant window (one or three day[s] preceding the date of admission) which would otherwise be deemed related to the inpatient stay.

For purposes of the preadmission bundling rules, a procedure is deemed to be related to the subsequent inpatient stay if it is clinically associated with the reason for a patient’s inpatient admission. The relevant preadmission window is three days for IPPS and Maryland hospitals and one-day for all non-IPPS hospitals, except for critical access hospitals (CAHs). CAHs are not subject to the preadmission bundling rules.

Change language

In Paragraph 5 of the narrative portion of the transmittal, CMS stated its change in policy, as follows:

“We are revising our billing instructions to allow payment for inpatient only procedures that are provided to a patient in the outpatient setting on the date of the inpatient admission or during the 3 calendar days (or 1 calendar day for a non-subsection (d) hospital) preceding the date of the inpatient admission that would otherwise be deemed related to the admission to be bundled into billing of the inpatient admission, according to our policy for the payment window for outpatient services treated as inpatient services.

Effective April 1, 2015, inpatient only procedures that are provided to a patient in the outpatient setting on the date of the inpatient admission or during the 3 calendar days (or 1 calendar day for a non-subsection (d) hospital) preceding the date of the inpatient admission that would otherwise be deemed related to the admission, according to our policy for the payment window for outpatient services treated as inpatient services will be covered by CMS and are eligible to be bundled into the billing of the inpatient admission.”

CMS also referred to related sections of the Medicare Claims Processing Manual (Chapter 4, §§ 10.12 and 180.7) that have been revised, accordingly, and included that revised language at the end of the transmittal. Interestingly, in revising the relevant manual sections, CMS did not add the positive language set out above. Instead, CMS simply deleted prior existing language that:

denied payment for preadmission inpatient-only procedures provided to a patient during the relevant window, even if they would otherwise be deemed related to the reason for the admission; and

required any such services to be billed on a separate non-covered, no pay TOB (0110), but not on the covered inpatient claim.

Unanswered questions

Presumably, these changes are at least in part designed to address the question often asked with respect to the situation where the patient comes into the outpatient setting to have a procedure performed that is not on the inpatient-only list. However, once there, an inpatient-only procedure is performed. In that case, is it sufficient if the hospital writes the inpatient order as soon as the procedure is completed? In the past, CMS has deferred the question to the MACs. This new policy would appear to more adequately respond to this question.

There are still a number of unanswered questions, however. Among others, one question raised by the change is whether compliance is permissive or mandatory. CMS stated it is changing its billing instructions “to allow payment” for certain preadmission inpatient-only procedures. Such procedures will be “eligible to be bundled into the inpatient claims.” Again, it is not clear whether compliance with these changes is permissive or mandatory, although it would certainly appear to be in a hospital’s best interests to comply.

One additional question is the treatment of other services performed in the outpatient setting on the same day as a preadmission inpatient-only procedure, whether diagnostic or non-diagnostic, related or unrelated. Under the general inpatient-only rules, all such services, even those otherwise covered and payable under the OPPS, are not covered when performed on the same day as an inpatient-only procedure. In other words: Are hospitals permitted, or required, to report such services on a subsequent inpatient claim, in accordance with otherwise applicable preadmission bundling rules?

Some of the answers may come when CMS releases the April 2015 quarterly update to the Integrated Outpatient Code Editor (IOCE) data files, instructions and specifications. Hospitals should certainly be on the lookout for these updates. Also, hospitals are encouraged to take advantage of open door forum call and other opportunities to bring related questions to the attention of the regulators.

Continuation of limitations on inpatient-only services billed as outpatient services

Except as specifically provided in this recent change, it appears the billing and coverage limitations on inpatient-only services performed and billed as outpatient services will continue to apply, subject to the existing separate procedure and emergency exceptions set out in the relevant sections of the Medicare Claims Processing Manual, as revised.

*MAGNET™, MAGNET RECOGNITION PROGRAM®, and ANCC MAGNET RECOGNITION® are trademarks of the American Nurses Credentialing Center (ANCC). The products and services of HCPro are neither sponsored nor endorsed by the ANCC. The acronym "MRP" is not a trademark of HCPro or its parent company.